EFunds Shares Fall After Downgrade

Shares of eFunds Corp. plunged more than 13 percent in Thursday trading after an analyst raised concerns over weak first-quarter earnings and said the electronic-payment processors core business is deteriorating. A day earlier, Scottsdale, Ariz.-based eFunds said its quarterly profit grew 40 percent to 26 cents per share, while revenue slipped 19 percent due to the sale of its automated-teller machine business in November. But setting aside gains from selling the unit, adjusted earnings would have been 22 cents per share -- missing the average estimate of 23 cents from analysts polled by Thomson Financial, according to Smith Barney Citigroup analyst Tony Wible. The analyst noted that revenue from eFunds core electronic-payment division, which grew 2 percent to $50.8 million, fell well short of his target for 16 percent growth. He added that the current business environment remains difficult, and forecast a continued decline in market share in the companys risk-management segment. We continue to see eFunds as a recovery story, but are becoming more concerned that deterioration of underlying business is offsetting the accretive deployment of cash, Wible wrote in a research note. Wible reduced eFunds to Neutral from Buy and lowered his target price to $25 from $27. Shares of eFunds were down $2.35, or 10.6 percent, to $19.92 in midday trading on the New York Stock Exchange, after falling as low as $19.25 in the morning.